Introduction
The issue of debt is a complex one for Christians. On one hand, the Bible warns against debt and extols the virtues of good stewardship with money. On the other hand, most people need to take on some debt to buy homes, cars, and pay for education in today’s economy. What is the right approach for Christians when it comes to debt? Should Christians avoid all debt no matter what? Or are certain types of debt acceptable? In this comprehensive blog post, we will examine what the Bible says about debt, the pros and cons of different types of debt, and key principles for Christians to manage debt wisely.
Key Takeaways:
- The Bible warns strongly against debt and praises good money management
- Certain types of debt like mortgage debt may be necessary and acceptable in moderation
- Credit card debt and consumer debt should be avoided if possible
- Students loans are often needed but should be minimized
- Debt should be used wisely and carefully based on biblical principles of stewardship and contentment
- Debt prevents us from properly loving and serving God and others
- Getting out of debt should be a key priority for Christians struggling with heavy debt burdens
What Does The Bible Say About Debt?
The Bible contains many warnings against debt and encourages living debt-free if possible. Here are some key verses about debt in the Bible:
“The rich rules over the poor, And the borrower becomes the lender’s slave.” (Proverbs 22:7 NKJV)
This verse illustrates how debt can make us slaves to the lender. It robs us of freedom and gives the lender power over us.
“Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.” (Romans 13:8 NKJV)
Paul teaches us to owe nothing but love. While he may have had moral and spiritual debts in mind, the principle applies to monetary debts too.
“The wicked borrows and does not repay, But the righteous shows mercy and gives.” (Psalm 37:21 NKJV)
Here the Psalmist distinguishes between the wicked who irresponsibly borrow and do not repay compared to the righteous who give generously.
“Go to the ant, you sluggard! Consider her ways and be wise…Without having any chief, Officer or ruler, She prepares her bread in summer and gathers her food in harvest. How long will you slumber, O sluggard? When will you rise from your sleep? A little sleep, a little slumber, A little folding of the hands to sleep—So shall your poverty come on you like a prowler.” (Proverbs 6:6-11 NKJV)
This passage encourages hard work, proper planning, and wise financial stewardship rather than being lazy and ending up in poverty. Living debt-free requires discipline and diligent work.
While the Bible does not explicitly forbid all forms of debt, it clearly treats debt negatively in most cases and encourages us to avoid it if possible. The only exception would be business loans to fund necessary growth and expansion. But even these loans should be used carefully. Overall, Scripture praises those who avoid debt and manage money wisely.
The Dangers and Downsides of Debt
Even though some debts may be unavoidable, it is important to consider the many dangers that debt poses:
Loss of Freedom – Debt makes us slaves to lenders as Proverbs 22:7 states. It robs us of financial freedom and flexibility. Our money choices become limited by debt payments.
Added Stress – Debt is a huge source of stress that can damage mental and physical health. The anxiety of owing money and managing payments weighs heavily on debtors.
Strained Relationships – Debt can put strain on marriages and other relationships. Arguments over money and debts may arise. There may be blame and guilt over who is responsible for the debt.
Lack of Generosity – Indebtedness often hinders generosity since so much money must go to debt payments. But as we saw, the Bible encourages generous giving.
Difficulty Serving God – Getting out of debt gives more time and money to serve God and others. Debt prevents us from properly loving God and neighbor.
Financial Vulnerability – Debt leaves us vulnerable to financial hardship if there are income disruptions. Job loss or emergency expenses become more challenging.
Bad Example – For Christians, excessive debt can be a bad testimony and example to others. It goes against biblical financial wisdom.
While debt seems unavoidable, it clearly has many pitfalls that Christians should be wary of. There are good reasons to avoid debt as much as reasonably possible.
Potentially Acceptable Types of Debt
Even though Scripture warns against debt, most Christians take on certain socially acceptable debts. What types of debt may be justifiable and prudent in today’s economy?
Home Mortgage Debt – Taking on mortgage debt is necessary for most people to buy a home. This can be reasonable as long as the home and mortgage are affordable based on your income and savings. Paying off your home early should be a priority.
Student Loans – Education often requires taking on student loan debt. But students should minimize loans by choosing affordable schools, qualifying for scholarships where possible, and working during school. Student loans should be seen as investments in your career.
Car Loans – Many people cannot afford to buy cars outright. But cars should be modest and affordable. Car loans should be paid off quickly. Always make a sizable down payment and pay more than the monthly minimum.
Business Loans – Well-managed business loans that fuel company growth and job creation can be beneficial. But the business must demonstrate the ability to repay debts.
Most financial advisors would recommend these forms of debt in moderation for those with solid incomes and financial habits. But caution is still wise with any debt. We should avoid luxury upgrades and excessive loans.
Debt to Be Avoided
While certain forms of debt may be tolerated, the Bible warns against debt. There are clearly types of high-risk debt Christians should avoid:
Credit Card Debt – Relying on credit card debt can start a dangerous spiral into deeper debt. Interest rates are usually very high. Credit card debt should be eliminated urgently through focused spending cutbacks. Manage money wisely to buy only what you can afford.
Payday Loans – Payday loans charge astronomical interest rates and keep borrowers trapped in cycles of debt. They prey on the poor and vulnerable. Christians should avoid them and help educate others on their dangers.
Cosigning Loans – Cosigning makes you 100% liable for someone else’s loan if they default. This is extremely risky. As Proverbs warns, “Do not be one of those who shakes hands in a pledge, one of those who is surety for debts; if you have nothing with which to pay, why should he take away your bed from under you?” (Proverbs 22:26-27 NKJV)
Excessive Debt – Taking on debt far beyond your income and ability to repay is unwise and unbiblical. Live within your means. Make sacrifices to avoid excessive debt that puts you at financial risk according to principles in Proverbs and elsewhere.
Debt for Fleeting Things – Debt should be avoided for purchasing fleeting luxuries and depreciating assets like vacations, clothing, expensive dinners out, etc. Passing pleasures are not worth going into debt over.
By minimizing these forms of high-risk debt that the Bible warns against, Christians can honor God through better stewardship and be less burdened financially.
Key Principles for Managing Debt Wisely
How then should Christians adopt good principles to manage debt wisely and ethically? Here are some key guidelines:
- Take on new debt carefully – Each debt obligation should be considered very carefully. Make sure it is truly needed, affordable, and the wisest option before taking on debt.
- Pay off debts urgently – Debt repayment should be a top monthly budget priority. Pay more than minimum payments and pay debts off early through focused debt snowball or avalanche approaches.
- Build savings first – Follow advice in Proverbs about saving money before buying things on debt. Aim to save cash first rather than buying everything now on credit.
- Be content and resist pressure – Contentment and resisting social pressure to overspend prevents bad debt. Be satisfied with what you have (Hebrews 13:5).
- Consult your spouse – For married couples, consult your spouse before taking on debt. Get agreement on household debt decisions.
- Count the costs – Carefully analyze the total costs of interest payments. Be sure to factor this into debt decisions.
- Do not cosign – Unless for your own child, avoid cosigning which makes you liable for other’s debts.
- Pay cash when possible – Follow the simple rule to only buy what you can afford to pay for with cash. Don’t finance everything.
- Give generously – Don’t let debt prevent generosity. Give regularly even when paying off debts. God will provide (2 Corinthians 9:8).
Applying these biblical principles will help Christians have a balanced view towards debt. We should strive to avoid and minimize dangerous debts through wise money management. But certain debts may be prudent if used cautiously. The key is relying on God rather than debt for our security.
Getting Out of Debt God’s Way
For Christians already burdened with heavy debts, here is some advice on getting out of debt while obeying biblical principles:
- Repent and ask God for help – Going into debt is often the result of ignoring God’s wisdom. Repent and ask God humbly for guidance and discipline. “If we confess our sins, He is faithful and just to forgive us our sins and to cleanse us from all unrighteousness.” (1 John 1:9 NKJV)
- Stop borrowing more money – The first step is to stop digging the debt hole even deeper. Commit to not taking on any new debts no matter what.
- Make debt repayment a priority – After tithes and basic needs, remaining money should go urgently to paying off debts. Make sacrifices of wants to meet this priority. “But seek first the kingdom of God and His righteousness, and all these things shall be added to you.” (Matthew 6:33 NKJV)
- Create a budget – Make a detailed budget plan identifying places to cut spending and direct those savings to debt repayment. “For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it?” (Luke 14:28 NKJV)
- Pay minimums on all debts first – To avoid defaults, pay minimum required payments on each debt first. Then apply any extra money to the highest interest rate debts first.
- Sell assets and downsize if needed – Consider ways to raise cash quickly through selling extra cars, furnishing, or other assets. Downsizing homes/lifestyles can free up cash flow.
- Increase income if possible – Within reason, consider ways to earn extra income through a side job or other means that can be applied to debts.
- Consult a nonprofit credit counselor – Get help creating a debt repayment plan. They can often negotiate better terms with creditors too.
With prayer, God’s help, and sound financial steps, Christians can get out of debt and back on the path of faithful stewardship. The freedom from debt is well worth the sacrifices required to gain that freedom.
Conclusion
Scripture strongly warns against debt while praising prudent financial practices that avoid unnecessary debts. Some debts may be tolerable but great caution is required. Debt should be minimized because it robs us of freedom, resources, and opportunities to serve God and others. It also violates the biblical principles of hard work, planning, generosity, and contentment. For Christians already in debt, urgent steps must be taken to eliminate it through God-honoring budgeting and repayment plans. While debt avoidance takes discipline and sacrifice, the rewards of debt freedom are tremendous. Christians should carefully and prayerfully consider when debts may or may not be appropriate for their circumstances. But all believers should aim to live as debt-free as possible by God’s grace.
